How to get a Business Loan with Bad Credit

computer-1185637_640Is bad credit preventing you from getting a loan? People with good credit have easier time when borrowing money from traditional banks. Unfortunately, bad credit plagues most small business owners due to a financial crisis that occurred several years ago. Even a small business with a stellar rating will find it harder to borrow from a bank.  

Funding is available for women with startup business ideas, but it is not easy to get. Most financing options are in the form of loans, which are mostly unattainable for people with bad credit. Still, plenty of funding options are available for a woman who wants to start her own business. If you can prove that you have the right experience to run a business, you will definitely get small business loans for women with bad credit.

Peer-to-peer lending

Depending on your startup idea, a peer-to-peer loan can be a great option for you. However, they work best for women who need a small amount of money, preferably less than 10,000 dollars, to start their businesses. In this P2P lending system, you make a request by telling others about your business idea and the qualifications you have to run it.

Individual investors will review your story and give you a fraction of the money with a certain interest rate. If you have bad credit, you present a higher risk, which means that the rates of interest will be higher. P2P lending is also a good way of soliciting funds from family and friends.

They can give you the money that you require and earn an interest, but you will not need to go through the hassle of paying them back directly. You can do all this through an intermediary website.

Venture capital and angel investors

When you need more capital to start your business, you should think about looking for venture capitalists and angel investors. These companies or individuals will provide you with the necessary funds, but they keep control of a percentage of profits and your company. The companies do not care about your personal credit score.

These investors mostly focus on your potential to run the business, your business plan, and the experience that your co-workers have. Venture capitalists and angel investors usually look for businesses in the field of technology that have the potential to make big profits in future. This means that they might not be very helpful for small, one-woman businesses.

Grants and loans for women

Women, who want to start their own businesses, can get grants. However, they are few and far-between and the competition to get them is very fierce. They usually originate from nonprofit organizations.

Grants are usually earmarked for disadvantaged women that reside in low-income areas. To make sure that you get the grants, you need to hire a professional grant writer who can write your proposal. However, you should remember that getting a loan with bad credit is never easy.

Because the government backs SBA loans, you should consider talking to a lending company that provides them; you never know, they might give you a chance. Your best chance, however, would be to speak to an organization that specializes in giving loans to women who own businesses. Such companies would be willing to give you a chance even if you have bad credit.

In this male dominated world, it is not easy for a woman to make a name for herself. It is even harder for a woman with bad credit to get her startup off the ground. The good news is that there are alternative funding programs that give business owners an opportunity.

Business Line of Credit: What is it?

startup-593327_640A business line of credit can be essential in helping your business to balance the difficulties of a business cycle. Due to the cyclical nature of businesses, you might have to borrow money at one point to meet your goals and needs. The most common way of obtaining these funds is by getting a business line of credit.

What is a line of credit?

A business line of credit is an arrangement between a customer and a financial institution. It allows the borrower to withdraw funds from the line of credit as long as he/she does not exceed the amount set in the agreement. The advantage of lines of credit over normal business loans is that interest will not be charged on the unused line of credit part.

Moreover, your business can withdraw from the line of credit at any time. Depending on your agreement with the bank, your line of credit could be categorized as a demand loan: outstanding balances need to be paid immediately at the request of the financial institution.

Why apply for a business line of credit

Your business needs to have a line of credit for several reasons. Of course, every business should have some cash on hand to help in dealing with emergencies. A business line of credit gives you cash whenever you need it.

If your business qualifies for a line of credit, you can use the money whenever you need money to deal with cash shortages. Having one is also useful when a good opportunity comes up or when you need to make up for seasonal dips in sales. The money will tide you over until your business gets back on its feet.

However, you should not use your line of credit to bail your business out of a huge financial crisis. Think of it as a safety net that will tide your business over until you get account receivables. A line of credit is meant to be used, paid, and then used again when you deem it necessary.

Although comparing a credit card to a line of credit is common, the two are very different. For instance, lines of credit do not come with huge credit card fees. It is quite possible to tide your business over with credit cards, but you should be ready to pay some hefty fees.

A business line of credit works in the same way as a revolving credit card; however, it does not have any fixed payments and is usually based on adjustable interest rates. Because each financial institution has varying business lines of credit, you need to check with your bank. You do not need to anticipate issues with your cash flow to apply for a business line of credit; just think of it as an insurance policy that you pay for only when you need it.

What should lines of credit be used for?

A line of credit is a financial instrument that is used for the short-term working capital needs of a business: company payroll and inventory purchases. They usually help to even out the cash flow in your business. Whether you are an established business or a startup that cannot make payroll at one point, you should consider acquiring a line of credit.

Moreover, small businesses need an inventory to get started. Your success is measured by your ability to give customers what they want. If your business is new, you should consider getting an unsecured small business line of credit. This line of credit can help you to close the gap between payables and receivables while funding your fluctuating payroll temporarily.

4 Common Debt Relief Strategies

calculator-1156121_640Believe it or not, many people are often caught off guard when they realize that they are in serious debt. You’d think it wouldn’t come as a major shock to them, but it does because bills suddenly seem to sneak up out of nowhere.

When you factor in food expenses, repair bills, the electric bill, cable and Internet, the water bill, vacations, leisure items, and every other expense that seems to pop up in our lives, it’s pretty easy to see how we could end up in debt over time.

And then the worst thing happens.

Your debt ends up reaching critical mass. And getting more credit to help relieve your debt burden is an impossible feat. When you carry a heavy debt load, this is really bad for a few different reasons.For starters, it’s going to seriously harm your credit score. When you have low cash flow and a low credit score, your borrowing options are very limited. But all hope is not lost. There are clear steps that you can take to eliminate your debt once and for all.

We’ll discuss four common debt relief strategies below.

Debt Consolidation Loans

If you are dealing with heavy debt loans, debt consolidation loans might be the most painless option. By taking out this new loan, you will have enough money available to pay off all of your own loans and completely consolidate your debt.

To get more specific, you’re really taking out this additional loan because you’re going to get it at a lower interest rate. And then you can use the money to pay off higher interest rate credit card debt, and ultimately pay down your debt faster by paying less interest and a lower monthly payment.

If you have the credit, you can take out a low interest credit line or a home equity loan.

Most people usually transfer their debt to an introductory zero interest credit card. Just remember that after the introductory period, the interest is going to kick in and you’ll have to pay whatever the agreed-upon amount is.

Debt Management

With this option, you’ll have to undergo credit counseling in an effort to learn how to better manage your debt. A debt counselor or debt manager will take a look at your entire financial picture once you become their client. After this is done, they will help you determine ways to cut down on your debt or cut it out completely. This counselor could potentially suggest that you cut back on certain expenses, especially if they are unnecessary. Then you’ll use the additional money to pay down your current heavy debt load.

Debt Settlement

Next, debt settlement is certainly a valid possibility.

More often than not, people will typically go this route when they begin running out of options and bankruptcy is not far on the horizon. A borrower in trouble often has a difficult time paying the debt based on the current structure.

With a settlement offer, they’ll only have to pay a certain percentage of the remaining balance through a series of structured payments if the deal is accepted by the lender.

Bankruptcy

When your debt burden becomes so big that you can’t handle it, a Chapter 7 or Chapter 11 bankruptcy filing might be your best option. Your unsecured debt will become eliminated, a.k.a. discharged, and your secured debt will then get restructured. According to experts for card ratings from Best Credit Cards Review, “When you use a secured credit card, your deposit acts as collateral to guarantee that you’ll repay any money you borrow.

To preserve your credit, it’s wise to avoid bankruptcy unless you have no other choice because your situation is so severe.

5 Ways Your Tax Return Will Pay Off Your Debt

calculator-1156121_640When your tax return arrives it can be very tempting to go on a shopping spree. After all, it is your money and you really could use some new shoes. However, getting rid of some debt with that tax return, at least part of it, could really set you on the right path to financial security for the rest of the year.

There are five types of debt that you should consider paying off with your tax return before going on a shopping spree.

  1. Payday Loan. If you have any type of payday loan, pay it off for good. Get rid of that high interest debt so that you can avoid paying those fees every payday to renew the loan. Once this loan is gone, you will have the money you need each week to cover your expenses.
  2. Pawn Shop Tickets. If you have items that are really precious to you that are in the pawn shop, pay off these tickets and eliminate these debts. If, perchance, these items hold little meaning to you, consider changing the pawn ticket into a sale ticket and just selling the item. Either way, you will eliminate a high interest debt that often costs more than the original loan.
  3. Title Loan. If you have a car title loan, pay it off. While these loans do not carry the costs and fees associated with some loan types, it will give you peace of mind to know that this debt is eliminated ad your car title is clear and free.
  4. Personal Loans. Personal loans obtained from [private lenders often carry very large interest rates. Paying off, or paying a significant portion, of this debt can save you a significant amount of money. Interest rates often account for over half of the money repaid on a loan of this type. Getting rid of this type of debt could save you hundreds, if not thousands of dollars in interest payments over the course of a loan. You will be pleased with the extra money you have each month once this debt is paid.
  5. High Interest Credit Card. Your return may not be enough to cover all of your credit card debt, but it may be enough to pay off at least one of these debts. Go through your credit card statements and see which card has the highest interest rates and chose that one to pay off. If all of the cards have the same interest rate, look for the one that has the highest balance and provides you with the least benefits. Get rid of this card and enjoy the money you save each month. You may even consider using the money you save from paying on this card each month to pay towards another debt or invest into a retirement account.

Taking these simple steps to pay off your debts will make you more financially secure and give you an overall feeling of accomplishment. Taking control of your debts is always a great way to help yourself succeed in the future.